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The natural gas markets had a slightly soft session during the Monday trading day as the volumes absolutely dried up due to Labor Day in the United States. However, we are right at an area where we would expect to see a lot of resistance, so the fact that today lost a little bit isn't much of a surprise in our opinion.
The fundamental outlook for natural gas still states that we will how far much more supply than demand, and as such we continue to sell this contract every time we get the chance. In the general vicinity that we are at right now, we would be more than happy to see a resistive candle from which to sell. In fact, we think the $3.00 level is going to be a bit of a barrier for the buyers to get through.
Looking at this chart, it appears that we have broken down below support, and are still retesting it for resistance. Because of this, we would be more than happy to sell a shooting star, bearish engulfing, or even just long red candle that appears between here and the $3.00 level. We still see the trend is been very much to the downside, and the fact that we have broken to a fresh lower low over the last couple weeks does suggest that the downtrend is picking up.
It should also be noted that we are coming out of the lowest liquidity time of the year as traders will focus less on the beach, and more on their charts. As volume picks up, we fully expect the sellers to step back into the market and push prices down. Obviously, we will look for the technical setups as usual, but overall the sentiment is pretty bearish on this commodity.
On a break of the lows from the Friday session, we would be more than willing to start selling again as it would be a confirmed "hanging man", which of course is very bearish. This also would show that the resistance area has held up as well. We of course would also sell any of the resistive candles and mentioned previously in this article. As for buying, we aren't even considering it until we get above the $3.30 level.